800 tycoons drop off dollar millionaires list

A man with a bundle of dollar bills

A man with a bundle of dollar bills. The weakening of the Kenyan shilling against the US dollar is the main contributor to the drop in the number of dollar millionaires in Kenya, experts say.

Photo credit: Shutterstock

Some 800 individuals fell off the list of Kenya’s dollar millionaires over the past year, primarily owing to a weak shilling whose value dropped by about nine per cent in 2022 thus shrinking the wealth of the tycoons in dollar terms. 

The latest 2023 Africa Wealth Report published by Henley & Partners alongside New World Wealth shows that Kenya’s dollar millionaires, people whose net worth is at least $1 million (Sh131 million), stood at 7,700 in 2022, a sharp drop from 8,500 the previous year.

Mr Churchill Ogutu, an economist at IC Group, said the weakening of the Kenyan shilling against the US dollar is the main contributor to the drop in the number of that category of wealthy individuals, coupled with slow economic growth witnessed for months last year.

“Most of the wealth of the rich is in the Kenyan shilling because they primarily earn in local currency. But we saw the shilling weakening against the dollar by between eight and nine per cent last year, so that played a big role in the valuation of their assets in dollar terms,” said Mr Ogutu.

However, the number of centi-millionaires (individuals with a net worth of at least $100 million or Sh1.31 billion) remained constant at 15, while no Kenyan managed to break into the dollar billionaire club (individuals worth more than Sh131 billion).

The report reveals that Africa’s “Big Five” private wealth markets — South Africa, Egypt, Nigeria, Kenya, and Morocco — together account for 56 per cent of the continent’s high-net-worth individuals (HNWIs) and over 90 per cent of its billionaires.

There are currently 138,000 HNWIs with a private wealth of $1 million or more living in Africa, along with 328 centi-millionaires worth $100 million or more, and 23 US-dollar billionaires.

The report shows that only six countries in Africa have dollar billionaires with Egypt having 8, South Africa having 5, Nigeria and Morocco having 4 each, and Algeria and Tanzania both having a single-dollar billionaire.

Despite the drop in Kenya’s dollar millionaires compared to last year, Kenya has recorded a 30 per cent increase in the number of its dollar millionaires since 2012 even as other countries have been recording sharp drops.

For instance, South Africa’s dollar millionaires have reduced by 21 per cent from 2012, those in Egypt have shrunk by 25 per cent, Nigeria’s have dropped by 30 per cent and Algeria’s dollar millionaires have reduced by 26 per cent during the same period.

Millionaires' migration

The report indicates that the number of tycoons in African countries varies annually depending not only on the local and global economic conditions but also due to the migration of the super-rich to other countries.

It shows about 18,500 HNWIs have left Africa over the past decade in search of greener pastures elsewhere outside the continent.

About 1,200 HNWIs have moved between African countries over the past 10 years, with most relocating to Mauritius and South Africa.

“Most have relocated to the UK, the USA, and the UAE. Significant numbers have also moved to Australia, Canada, France, Israel, Monaco, New Zealand, Portugal, and Switzerland,” said the report.

To underline this movement, the report shows that, while some 50 dollar billionaires were born in Africa, just 23 of them still live on the continent, raising concerns that the tycoons are exporting business away from their home countries.

“Billionaires rarely move for tax reasons. They usually relocate to expand their businesses or due to safety concerns,” it says. After growing sharply by 7.5 per cent in 2021, Kenya’s gross domestic product (GDP) slowed down in 2022 amid a biting drought, high inflation, and jitters ahead of the August 2022 elections.

Treasury estimates that the local economy grew by 5.5 per cent last year and has been banking on a higher projected growth rate of 6.1 per cent this year to enable it to hit its revenue targets.

Africa is home to some of the world’s fastest-growing markets, including Rwanda, Mauritius, and Seychelles, which have seen wealth growth of 72 per cent, 69 per cent, and 54 per cent respectively over the past decade.

The report projects Mauritius to experience the highest private wealth growth rate at 75 per cent over the next decade, making it the fourth fastest-growing country globally in millionaire growth percentage terms after Vietnam, India, and New Zealand.